Chief Economist Scott Brown discusses the latest market data.
The March Employment Report was strong. Nonfarm payrolls rose by 431,000 – less than expected but with upward revisions to January and February (a 562,000 monthly average in 1Q22). The unemployment rate fell to 3.6%, which is where it was before the pandemic. Labor force participation rates improved and, with the exception of older workers, are at or near pre-pandemic levels.
Personal income rose 0.5% in the initial estimate for February (+6.0%), led by a 0.9% gain in private-sector wages and salaries (+12.6% y/y). Inflation-adjusted disposable income fell 0.4% (-1.6%), reflecting reduced transfer payments. Personal spending rose 0.2% (-0.4% adjusting for inflation), following a revised 2.7% gain in January. The PCE Price Index rose 0.6% (+6.4% y/y, well above the Fed’s 2% goal).
Next week: Investors will look to the minutes of the March 15 to 16 Federal Open Market Committee (FOMC) meeting to gauge the likelihood of a steeper increase in short-term interest rates, as well as any details about the upcoming runoff in the Fed’s balance sheet. The ISM Services Index for March should remain consistent with moderate growth in the near term. Jobless claims will undergo annual benchmark revisions, but that shouldn’t change the picture of a tight labor market. On Tuesday, Fed Vice Chair Lael Brainard will speak on the variation in inflation experiences across households.
As of close of business 3/31/2022
As of close of business 3/31/2022
All expressions of opinion reflect the judgment of the author and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business March 31, 2022.
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